Chase testing $5 charge for rival ATM withdrawals

(Crain's) — J. P. Morgan Chase & Co., the biggest bank in Chicago by deposits and number of ATMs, has raised its fee to $5 for non-customers who withdraw cash from their accounts using one of Chase's ATMs.

The fee increase is part of a nationwide test of what levies customers will accept, as big banks impose new charges on consumers to help recover revenue lost to federal restrictions, a spokeswoman said. Illinois is the state with the highest test fee. Chase ATMs in Texas, for example, have a $4 fee.

The fee change is effective at 1,700 Chase ATMs in Illinois.

The 480 Chase-owned machines in Walgreen drug stores around the state are not affected. They will continue to charge $3 for withdrawals by customers of banks other than Chase.

Chase customers will still be able to use the bank's ATM network at no charge, one of the bank's key selling points in attracting retail customers.

Bank of America Corp. charges $3 for non-customers and has no plans to change its policy, a spokeswoman says.

Chase and other big retail banks like B of A and Citibank are imposing new fees on their own customers in addition to non-customers who use their services. They all are facing substantial revenue declines due to coming regulations that will sharply reduce the fees they can collect from merchants who accept their debit cards.

Also, new federal rules prohibit banks, without explicit customer permission, from processing debit charges when there's not enough money in an account and then charging customers hefty overdraft fees. That's also reducing revenue from that source, which accounts for more than half of most banks' account-service charges.

The new ATM fee level in Illinois is being imposed on a pilot basis and may be changed in the future, the spokeswoman said.

Other banks with smaller ATM networks, which try to compete with Chase by agreeing to pay the surcharges at competing banks' ATMs for their customers, are responding to surging ATM fees by eliminating that service. PNC Bank, the fourth-largest bank in Chicago by deposits, will stop paying its customers' out-of-network ATM charges in September if they have a free checking account, a spokesman says.